New Delhi/Mumbai: In a landmark judgement, India’s apex court rejected Swiss drug maker Novartis AG’s legal challenge aimed at securing a patent for blockbuster anti-cancer drug imatinib mesylate, branded Glivec in the country.

The verdict, which is seen as a setback to multinational pharmaceutical companies operating in India, may influence a rash of pending disputes at various stages of litigation. While domestic pharma companies manufacturing generics will breathe a sigh of relief, consumers stand to gain as the expectation is that the decision could lead to lower drug prices.

Glivec, used in treating chronic myeloid leukaemia, is priced at Rs.1.2 lakh per person per month while the generic version of the drug costs around Rs.8,000.

The verdict will discourage innovative drug discovery essential to advancing medical science for patients, Novartis India vice-chairman Ranjit Shahani said on Monday.

“We brought this case because we strongly believe patents safeguard innovation and encourage medical progress,” Shahani said at a press briefing in Mumbai. “This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options.”

Overseas drug makers are keen on gaining a bigger share of India’s pharmaceutical market, which is seen growing to Rs.5 trillion from Rs.1 trillion by 2020, according to India’s department of pharmaceuticals.

This has also led to the acquisitions or part-acquisition of local firms by overseas companies including the purchase of Ranbaxy Laboratories Ltd by Japanese drug maker Daiichi Sankyo Co. Ltd, Matrix Laboratories Ltd by Mylan Inc., Dabur Pharma Ltd by the Singapore unit of Germany’s Fresenius Kabi AG, Shantha Biotechnics by Sanofi-Aventis SA, Orchid Chemicals and Pharmaceuticals Ltd’s generic injectables business by Hospira Inc. and Piramal Healthcare Ltd’s branded generics unit by Abbott Laboratories.

A bench of justices Aftab Alam and Ranjana Prakash Desai dismissed the Novartis plea for the exclusive right to manufacture the blood cancer drug on the grounds that it “did not meet any standard of novelty or inventiveness”, according to Pratibha Singh, an intellectual property rights expert and lawyer for generic drug maker Cipla Ltd.

Essentially, they ruled that the changes made to the drug by Novartis did not add any significant therapeutic value.

In their verdict, the court stated that “the beta crystalline form of imatinib mesylate, fails in both the tests of invention and patentability as provided under of section 2(1) and section 3(d) respectively”. Section 2(1) refers to enhanced efficacy and section 3(d) addresses the issue of patentability.

The keenly followed legal battle, which lasted seven years, is significant because Novartis had challenged interpretation of section 3(d) of the Indian Patents Act, a public health safeguard introduced by Parliament in 2005 to prevent so-called evergreening. This refers to a process supposedly used to extend patents on known drugs by tweaking them.

Under the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement formulated by the World Trade Organization, innovator firms are granted patent monopoly for 20 years, after which generic companies are allowed to make cheaper copies of the original drug without paying the innovator.

Monday’s judgement provides clarity on evergreening or incremental innovation undertaken by pharmaceutical companies to protect patents. The company can file a review petition in 30 days, but Shahani refused to comment when asked about the possibility of such a petition.

Y.K. Hamied, chairman of local drug maker Cipla, one of the key opponents to the Novartis claim in the case, welcomed the verdict.

“We are pleased with the judgement which prevents the use of frivolous patents to deny access to medicines for patients,” he said in a statement. “India, being the pharmacy capital of the world, can continue to produce affordable, high quality medicines without the threat of patents for minor modifications of known medicines. This judgement will not only benefit patients in India, but patients around the world.”

Anand Grover, senior counsel for the Cancer Aid Patients Society, which opposed Novartis in the case, also hailed the decision.

“The Supreme Court’s interpretation of section 3(d) keeps it intact. It gives life to Parliament’s intent of facilitating access to medicines and of incentivizing only genuine research,” he said. “By refusing patent monopolies on minor changes to known molecules, this judgement will facilitate an early entry of generic medicines into the market for other diseases too. The impact of this judgement will not be felt in India alone, but across the developing world.”

The Novartis India stock dropped nearly 7% in intraday trade after the verdict was announced, then recouped its losses. It closed at Rs.587.95, down 1.81%, on BSE. The benchmark S&P BSE Sensex rose 0.15% to 18,864.75 points.

The Swiss drug maker has a patent for the same drug, in a modified version, in 40 countries including the US, Russia and China.

In 2006, Indian authorities denied Novartis a patent for Glivec stating that the drug wasn’t a new molecule, but an altered version of one that had already been on the market for around 15 years. Novartis then challenged the rejection of its patent application by the Indian patent office and subsequently by the Intellectual Property Appellate Board. Following this, the company challenged the interpretation of section 3(d) in the Chennai high court in 2009. It filed its appeal in the Supreme Court as well the same year.

The top local generic drug makers’ body, the Indian Pharmaceutical Alliance (IPA), welcomed the Supreme Court verdict. “This is a landmark judgement that will serve to set at rest the controversy that was raised regarding the scope of section 3(d) in the patents Act, which is a crucial safeguard against the extension of patent monopolies of known drugs and the consequent delay in the availability of affordable generic versions,” IPA secretary general Dilip G. Shah said in a statement.

Imatinib is on the national list of essential medicines and is used in the treatment of certain blood and stomach cancers. The decision of the Supreme Court will mean several Indian companies, including Cipla, Ranbaxy and Natco Pharma, can continue selling imatinib at a fraction of the cost of the Novartis product, said Shah of IPA, which was an intervenor in the litigation before the Supreme Court.